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Nexstar Broadcasting Group Inc. Reports Operating Results (10-Q)

May 15, 2009 | About:
Joe Citarrella

Nexstar Broadcasting Group Inc. (NXST) filed Quarterly Report for the period ended 2009-03-31.

Nexstar Broadcasting Group currently owns operates programs or provides sales and other services to television stations in the states of Illinois Indiana Maryland Missouri Montana Texas Pennsylvania Louisiana Arkansas Alabama and New York. Nexstar's television station group includes affiliates of NBC CBS ABC FOX and UPN. Nexstar Broadcasting Group Inc. has a market cap of $21.6 million; its shares were traded at around $0.76 with and P/S ratio of 0.1.

Highlight of Business Operations:

On April 11, 2006, we and Mission filed an application with the FCC for consent to assignment of the license of KFTA (Ft. Smith, Arkansas) from us to Mission. Consideration for this transaction is set at $5.6 million. On August 28, 2006, we and Mission entered into a local service agreement whereby (a) Mission pays us $5 thousand per month for the right to broadcast Fox programming on KFTA during the Fox network programming time periods and (b) we pay Mission $20 thousand per month for the right to sell all advertising time on KFTA within the Fox network programming time periods. The local service agreement between us and Mission will terminate upon assignment of KFTA’s FCC license from us to Mission. Upon completing the assignment of KFTA’s license, Mission plans to enter into a JSA and SSA with our station KNWA in Fort Smith-Fayetteville-Springdale-Rogers, Arkansas, whereby KNWA will provide local news, sales and other non-programming services to KFTA.

Gross local advertising revenue was $35.9 million for the three months ended March 31, 2009, compared to $41.9 million for the same period in 2008, a decrease of $6.0 million, or 14.4%. Gross national advertising revenue was $12.1 million for the three months ended March 31, 2009, compared to $16.2 million for the same period in 2008, a decrease of $4.1 million, or 25.1%. Net revenue for the three months ended March 31, 2009 decreased 12.9% to $55.5 million compared to $63.7 million for the three months ended March 31, 2008. Advertising revenue from Automotive, Furniture, Paid Programming, and Insurance business categories decreased by approximately $5.4 million, $1.0 million, $0.7 million and $0.8 million during the first quarter of 2009 compared to the prior year, respectively.

Gross political advertising revenue was $0.4 million for the three months ended March 31, 2009, compared to $2.1 million for the same period in 2008, a decrease of $1.7 million, or 78.9%. The decrease in gross political revenue was mainly attributed to the lack of the presidential and statewide primary elections and statewide and/or local races during the three months ended March 31, 2009 as compared to the three months ended March 31, 2008 when these races took place.

Corporate expenses, related to costs associated with the centralized management of Nexstar’s and Mission’s stations, were $6.8 million for the three months ended March 31, 2009, compared to $3.2 million for the three months ended March 31, 2008, an increase of $3.6 million, or 110.0%. The increase during the three months ended March 31, 2009 was primarily attributed to $2.9 million in fees associated with the March 2009 7% notes exchange offer including bank, legal and accounting fees combined with increases in professional fees of $0.3 million and vacation accruals of $0.3 million, partially offset by a decrease in stock-based compensation of $0.2 million.

Station direct operating expenses, consisting primarily of news, engineering and programming, net of trade, and selling, general and administrative expenses were $34.5 million for the three months ended March 31, 2009, compared to $35.7 million for the same period in 2008, a decrease of $1.2 million, or 3.3%. The decrease in station direct operating expenses, net of trade, and selling, general and administrative expenses for the three months ended March 31, 2009 was primarily attributed to decreases in national and local sales commissions in the amount of $0.7 million, which are attributable to decreases in national and local revenue.

During the three months ended March 31, 2009, the Company purchased $27.9 million of its 11.375% notes and $1.0 million of its 7% notes for a total of $10.0 million, plus accrued interest of $1.0 million. These transactions resulted in combined gains of $18.6 million for the quarter.

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